An important element in many entrepreneurial success stories is the business partnership.Â However, building partnerships that last involve a great deal of work. Partnerships are like a marriage which means that issues like ego, money, and stress, plus the added factor of having to manage others, can wreak havoc on the relationship.
BlackEnterprise.com polled members of the Young Entrepreneur Council to find out, “What is one thing you should look for in a potential partnership to ensure it will be mutually beneficial and effective?” Here’s what they had to say:
1. Honesty and Commitment
A business partnership is like a marriage. You need to be on the same page at all times. Communication is key–but the commitment to the product is even more important. Do you have the same visions? Talk about it — do you find yourself avoiding certain topics because you think they may have a different idea? Then that’s the one you should bring up first.
It’s important to be transparent and open from day one, so that nobody is surprised to discover anything. Secrecy will lead to tension, which can doom an otherwise good partnership.
3. Complementary Skill Sets
It isn’t beneficial or practical to form a partnership with somebody who shares the same skill sets and core competencies as you do. If both are fantastic at sales but not at running a company, then you either hire the needed talent, or face reality that the partnership was great in theory but not in reality.
-Â Ken Cauley,Â Advanced Media
5. Strong Mutual Benefit
Our whole business is partnerships. Before approaching any partner make sure there is significant mutual benefit, otherwise you’re wasting everyone’s time. Partnerships take time and I’ve found the ones that make the most sense usually take the least time and bring the best results. Similarly those that I’ve been unsure of or not excited about either don’t pan out or have minimal success.
Even the best intentions need to be vocalized when more than one person is involved in decision making. Stepping on toes is way too easy, especially in business. Communicating in real time has never been easier, there’s no reason not to!
7. Equal Terms
Just because you can negotiate superior terms doesn’t mean that you should tilt things too much in your favor. I have negotiated terms that were too favorable for us and not favorable enough for the other side, which in turn lead to less interest and bitterness from the partner. Make sure that you negotiate terms that both sides can live with long term or it will bite you in unexpected ways later.
8. Clear Goals
It is crucial in any business partnership for each party to be completely clear on their goals and what they hope to get out of the collaboration. In my experience, partnerships where this is not the case often run into trouble down the road.
9. Skill Set Diversification
My business partner and I work well together because we have different skill sets and passions. If you both are good at the same things and like handling the same parts of the business then your company doesn’t need both of you! Find someone who complements your skill set and you’ll have a lot less drama because you won’t step on each other’s toes.
10. Shared Vision
It’s not about friendship; it’s about leveraging each others strengths. In my opinion, the most important step in evaluating a partnership is ensuring there is a shared vision.
11. Company Culture Alignment
You have to make sure they share your vision and align with your company’s culture. For example, in my business I might have the most successful realtor in the market want to join with us. But their success won’t overcome their failure to understand or embrace our culture.
12. Understanding Responsibilities
One of the keys to all partnerships is to lay out responsibilities, ownership and key metrics early and in writing, prior to the business getting off the ground. This allows everyone to then work as a team, be more focused and avoid distractions or disgruntlement later on once the business is growing.
13. Minimum Weekly Committed Hours
When my co-founder and I started our company together, outside of equity and roles we focused on setting up a minimum amount of committed work hours per week. Often people start projects and then get sidetracked by others. By making sure you each do 20 hours a week, as an example, you know the other partner is just as committed.
Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched StartupCollective, a free virtual mentorship program.